German Case Against ECB Bond Buying Starts in Appeals Court

Europe’s highest appeals court plans to begin hearing arguments Tuesday morning on a suit that aims to block a European Central Bank (ECB) bond-buying program that has never been deployed — but whose mere announcement two years ago was widely credited with helping rescuing the euro zone from market forces that could have destroyed it.

The Court of Justice of the European Union, in Luxembourg, is not expected to rule until next year on the lawsuit, brought by a group of disgruntled Germans. But analysts will be listening closely Tuesday for indications of how the judges may be thinking about the legal issues.

“The discussion and specifically questions posed by the EU judges to the parties involved during the hearing might give some early insight on their views,” Thomas Harjes, an analyst at Barclays, said in a note to investors.

The suit involves a plan the European Central Bank announced in 2012 to buy bonds of stricken euro zone countries in order to hold down market interest rates on their government debt. At the time, market rates on bonds issued by Spain, Italy and some other countries had reached levels that could have eventually forced them to default.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza